The cloud presents an enormous opportunity for procurement in healthcare to expedite transactions with efficiency and agility. A cloud-based platform eliminates many obstacles enabling a smoother process for transactions and shipments. Imagine the benefits, for example, of speeding the replenishment process, or eventually, a world in which replenishments refill automatically.
The healthcare industry is undergoing significant change. In response, supply chain has the potential to make forward progress in both new and old problems, but success in the new environment calls for a different approach. Where a traditional approach may feel more comfortable, the industry must embrace innovative thinking to tackle the challenges in this new era.
The movement of care from the acute to non-acute settings is undeniable. Far from just traditional primary care, the activity taking place in outpatient (OP) settings is including more complex surgical procedures than ever before. By as early as next year an estimated 64% of surgical cases will be performed in the OP environment, with 60% of those cases being done in Ambulatory Surgical Centers (ASCs). Some service lines, like Spine and Orthopedics have projected growth in OP locations of 35% or greater over the next 10 years. These numbers will continue to grow as the Centers for Medicare & Medicaid Services (CMS) approves more and more procedures for reimbursement in OP and ASCs.
In my previous blog post, I described how the healthcare industry has yet to tackle standardization and automation of so-called “advanced” supply chain transaction sets. These are processes around pricing alignment and reconciliation that go beyond the basics of placing an order, delivering the products and billing for those products. The manual management of price changes in healthcare is complex, challenging and costly, placing a significant burden on all parties to a contract (e.g. manufacturer, distributor, provider, GPO).
Essential to supply chain, and the key to keeping an organization stocked with the supplies needed to operate is the procurement of goods and services. The importance of this process can’t be understated in the case of healthcare, where lives are literally on the line and depending on the right supplies when they are needed.
Traditionally, the procurement process has lagged behind other business processes in advancements relating to efficiency and automation, but that is changing. Cloud-based technology is enabling procurement to make progress along the lines of data interoperability, and visibility and agility in transactions.
Two decades ago, a few healthcare supply chain partners decided to automate basic transactions so that they could improve efficiency and accuracy and reduce costs – and the GHX Exchange was born. Today over 10 thousand supplier divisions and 19 thousand provider facilities use GHX standards to automate the four core supply chain documents: The purchase order (850), purchase order acknowledgment (855), advance ship notice (856) and invoice (810). These “basic” supply chain transactions encompass the processes around placing an order, delivering the products and billing for those products.
What role does the purchase order acknowledgment (POA) play in supporting better patient outcomes? This simple task, when accomplished, can be traced back to multiple advantages in the healthcare supply chain. This is especially true when the POA is part of a holistic, standardized approach to order management. The supply chain team gains greater visibility into order status and can better manage the process of delivering the correct products in a timely manner to support patient care.
In my last post, Integrating Academic and Non-Acute Supply Chain, I drilled down into some of the challenges for this initiative around data, buying behavior and aligning cross-functionally for success. This is an ambitious endeavor, aligning the people, processes and systems, but certainly will deliver significant benefits. When you are ready to take the next steps there are several key considerations for gathering requirements and choosing a technology partner.
Expanding on the thoughts from my earlier post, Healthcare Supply Chain in 2019: A Look Forward, I want to take a deeper dive into the three areas that were top of mind, starting with the integration of non-acute and academic supply chain.
As more and more organizations in both the academic and acute care sectors are realizing the broad value that supply chain can deliver, there is a movement to integrate (consolidate and standardize) the core mechanisms of sourcing, procurement, supplier and contract lifecycle. The procurement of goods and services through an efficient and effective supply chain will become increasingly vital to ensure that higher-education institutions have governance related to the effective appropriation of funds.
Healthcare data breaches reached an all-time high this past July. U.S. Department of Health & Human Services’ Office for Civil Rights records showed that data from 858,411 individuals were put at risk. Unfortunately, this is not necessarily surprising news, but it does serve as a reminder that a single breach can expose thousands of patient records and put individual personal information at risk for fraudulent activity. It also can be a costly event for healthcare providers from a financial and reputational perspective.
Supply chain remains the second largest expense for healthcare providers. A recent Navigant study showed U.S. hospitals could reduce annual supply expenses by roughly $23B in aggregate through improvements in supply chain operations, processes and product use – effective management of spend, inventory and operational processes are key to optimize spend management for any health system.
Blockchain is an emerging technology that has received quite a bit of attention for the potential to disrupt in a variety of industries. Healthcare stands to benefit from the technology as blockchains are designed for large volumes of data. The industry is characterized by massive amounts of data, much of it siloed and difficult to access through disparate technology.
The value that could be gained from the data for process improvement to increase efficiency and reduce costs has been held back by the lack of interoperability and accessibility. But blockchain may open the gate. The application of blockchain technology for the healthcare industry holds promise for everything from clinical and insurance records to payer files and supply chain.
It’s not unusual for departments in healthcare organizations to work in silos, a metaphor that reminds us of those tall farm structures used to hold and protect grain and feed. While there are many circumstances when healthcare information needs to be guarded, especially when it comes to patients, isolating data in some departments can actually harm an organization.
In certain cases, information sharing and collaboration is essential.
For instance, when people in supply chain and finance departments proactively collaborate, synch up efforts, plus integrate their technology, it can help an organization achieve its overarching mission of delivering quality patient care while reducing costs.
Standardization is critical to the successful transition to value-based healthcare. Karen Conway, vice president, Healthcare Value for GHX recently reported on the value of GS1 standards for clinicians following the 34th Global Healthcare Conference in Bangkok, Thailand. New to the conference this year were sessions on the role of standards in improving value-based healthcare. Susan Moffat-Bruce, MD, a thoracic surgeon and executive director of The Ohio State University (OSU) Wexner Medical Center explained that doctors want to improve patient outcomes, but many are not aware of GS1 standards and the value they can provide.